Economics is based on productivity, not jobs. As the classic saying goes, if a healthy economy were based on jobs, roads would be dug out with spoons instead of bulldozers, because you would have to employ many times more people. However, I don’t think that anyone besides maybe Keynesians would argue that a healthy economy is created by taking away people’s shovels and giving them spoons. So what is a healthy economy ACTUALLY about? It’s about increasing the value of things. For example, a well made table has more value than the tree that was used to cut it. Trees are everywhere, and we don’t really pay for them (besides property taxes), but people will generally pay more for a well-made table than a tree that they wouldn’t use. Therefore, the tables are more valuable than the trees. This is how wealth is created. It’s amazingly simple. It is about exchanges. What you buy with your money is more valuable to you than the money that you have, or else you would keep the money and not buy the item. So ask yourself this simple question: how do people make money? Other people have to pay them. So what does this mean? If everyone wants money, everyone has to be paid by someone else. It’s a perfectly circular system. An absolutely beautiful one. That is called the free market.
The lazy and ignorant truly always will be poor. This is not to say that all poor people are either lazy nor ignorant. Charity is the only true way to help out those in need, not theft. You say you want to help out the poor, but you want to use other people’s money. If all of you socialists want to help out the poor, pool your money together and do it. If you had a simple understanding of capital, you would understand how wealth is actually created. If your source of income is to constantly steal from the rich, what are you going to do when you bleed them dry? If a company makes a lot of money, it is going to expect to keep it. The money that you take from that company will no longer be there if the company decides it is not worth its time to continue to keep working while you take the money from it against its will. That is exactly why companies move overseas: to keep the government from redistributing the money that they have earned.
Meanwhile, the government keeps giving people direct handouts while the real production goes overseas, and soon people can’t live without a government handout. But the problem is that the government does not create goods: it only creates paper. When you do not allow companies to keep the profits they have earned, they move their production overseas. That is why we buy things from China. So the more and more production goes overseas, the less and less value we have in America. Sure, the Federal Government can print off pieces of paper, as they do. But if everything is being produced in China, then what do we have to offer the Chinese in exchange for these goods? Those pieces of paper mean nothing to them if they have nothing to buy with them. So, they do not exchange with us, and soon we are left with no production and no means to consume. This is how depressions happen.
The only way to keep this from happening is to allow people to produce and consume. I do not think that there is any possible way for anyone to know exactly what will be produced in the future, at what costs, how much will be produced, nor any way for anyone to know exactly how much demand will be out there, nor at what costs. But the only way to figure this out even remotely is to allow the free market to flourish. I create something, offer it at a certain price, and see if people pay it. When everyone does this, you have a flourishing economy. Prices rise with increased demand, and fall with decreased demand. Production increases with increased demand, and decreases with decreased demand.
Think of it this way: how many people would buy a shit sandwich?
If a company is creating shit sandwiches, and offering them for $100 a turd, do you think that anyone is going to buy a sandwich?
Maybe for “shits” and giggles. Obviously, most people would consider that a huge ripoff. So they will not even entertain the notion of buying the shit sandwich. So in this case, people were getting ripped off, and the shit sandwich seller is not selling sandwiches. He is not going to make profits if he does not stop ripping people off.
However, smartphones are in high demand.
People love smartphones, and they are willing to pay a lot of money for them.
If they don’t, they don’t get the smartphone.
The company must pay for the raw materials, plus pay for the labor, plus pay for any overhead or bills, plus taxes.
They aren’t going to create these smartphones unless it is worth their time in the form of profits.
Therefore, high profits signal that people are getting their demands reached.
The more profits a company makes, the more the needs of the consumer are being met.
Remember, you are not going to pay $100 for a shit sandwich. That is the epitome of getting ripped off, unless you decided that the shit sandwich actually was worth $100.
Paying $400 for a smartphone is not getting ripped off. If it was, then why in the fuck are you buying the product in the first place? You are only buying it because you think it is more valuable than other things you could have bought with the $400.
Profits are a signal that you have created things of value to society.
There are two ways to create things of value through society: do it through the voluntary exchanges of a free market, or through slavery.
To those of you that thing “wages” are slavery, stop working then. Be self-sufficient. Don’t even worry about money. If you want people to do things for you without payment, who is going to do that besides a charity? How about if I made you build me a new house and a new car and all of these other things without payment? Now what if I offered you a sum of money that you would accept? That is the basis of a free market.
Whoever has been teaching that the free market is a greedy system built upon ripping people off is a liar.
No one thinks they are getting ripped off when they buy things from Wal-Mart.
They just think it’s greedy when they realize that Wal-Mart is earning the just compensation for its work.
Everyone wants to be rich.
But there is a reason that not everyone gets there.
The nature of wealth itself does not allow for this to happen, because wealth is created by value added: it is not intrinsic.
Wealth is not something magical. It only happens in two ways: through voluntary exchanges, and through theft.
Buying something is not theft.
June 13, 2013.
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